News roundup, 31 Jan 2025

- No survivors have been found in the midair collision near DC, and none are expected. For his part, Donald Trump is blaming diversity efforts at the FAA. I'm sure Germany's leaders probably cast a few similar aspersions about the blame for the Hindenburg disaster as well. In actual fact, the FAA may well deserve some of the blame, not because of diversity but because of short-staffing - there was only a single controller working that night in one of the busiest and most complicated airspaces in the country.

- Trump is accusing the Federal Reserve and its chair, Jerome Powell, of causing inflation after the Fed decided to keep interest rates at their current level. On cue, he's also blaming DEI policies for the matter. No doubt Trump's supporters in Congress will be all too willing to pass the necessary legislation to weaken the independence of the central bank, assuming of course that Trump's attention span is long enough to keep him from moving on to something else before acting.

- One of Trump's executive orders mandates schools, among other things, to provide "patriotic education". The order even goes so far as to provide a definition:

(d)  “Patriotic education” means a presentation of the history of America grounded in:
(i)    an accurate, honest, unifying, inspiring, and ennobling characterization of America’s founding and foundational principles;
(ii)   a clear examination of how the United States has admirably grown closer to its noble principles throughout its history;
(iii)  the concept that commitment to America’s aspirations is beneficial and justified; and
(iv)   the concept that celebration of America’s greatness and history is proper.

Setting aside the fact that any characterizing of America's founding that is accurate and honest is almost certain not to be "unifying, inspiring, and ennobling", this whole thing sounds like it could have come straight out of the Chinese Communist Party.

- A bill before the Tennessee legislature would make make it illegal for legislators to vote in favour of immigration policies opposed by Trump, punishable by up to six years in prison and/or a $3,000 fine.

- Trump has purged the National Labor Relations Board; not only has he removed the board's general counsel (which is legal, since that is an "at pleasure" position), but he has also removed a board member who, according to legislation, has a fixed term. As a result, the board lacks a quorum and is unable to make rulings or certify union representation. Worse, since Trump is almost sure to get away with this, it is expected that he will take similar measures with other ostensibly independent government agencies.

- FCC chair Brendan Carr, appointed by Trump during his previous term (and notably not removed by the Biden administration) has ordered an investigation into NPR and PBS, with the ultimate goal of slashing funding for the broadcasters.

- A priest in an Anglican splinter group has been defrocked after giving a Nazi salute during a speech at the National Pro-Life Summit in Washington. Worth noting is the fact that the church in question, the Anglican Catholic Church, had actually split from the main Anglican communion because the latter wasn't sufficiently socially conservative. I guess even they have standards, though.

- Hot on the heels of one of those Dec. 6 rioters pardoned by Trump dying in a confrontation with police, it turns out that another of them is wanted for soliciting sex with a minor.

- A woman who recently died in Taber, Alberta turned out to have been a longtime fugitive from American and Mexican authorities. She was suspected of killing two people in Missouri, then after fleeing to Mexico was jailed for killing a man in a botched robbery but escaped from prison in 1969 and remained at large for the rest of her life.

Bank of Canada approaches its day of reckoning

Canada's central bank has announced that it will not be raising rates yet. However, sooner or later this will change. The thing is, setting the rates is a tricky balancing act. If they don't raise them eventually, inflation will become excessive; on the other hand, if they raise them too soon or too much, they will choke off the recovery. After all, high rates mean more of people's previously disposable income will be going towards paying their mortgages and credit cards, and businesses that might want to expand will face higher borrowing costs. And this is likely coming within the next couple of months, whether we like it or not.

Unfortunately, rising oil prices are likely to complicate matters further. The thing is, expensive oil is both inflationary and anti-growth, so we could see a burst of stagflation within the next few years. Hang on; it's going to be quite a ride.

Carney urges prudence on debt

Notwithstanding anything I might have said or implied in this post, debt is something that must be managed carefully. It's rather difficult to run a household, much less an economy, without some use of it, but as we've seen lately it has a way of running away on people... and when it happens to a lot of people at the same time, the effect can be dramatic. Mark Carney, governor of the Bank of Canada, is urging caution in this regard:

Household debt is now the biggest risk to the financial system, even if it is not expected to climb to levels that could cripple bank balance sheets, the central bank said Thursday in its review of the financial system. It used a “stress test'' to show that rising interest rates between mid-2010 and mid-2012 would saddle a growing number of Canadians with unmanageable debt loads.

Mr. Carney, the Bank of Canada governor, who has guided monetary policy throughout the crisis, is relying on consumers to help drive a recovery juiced by his historically low interest rates. Yet he is also warning borrowers and lenders not to go overboard and to think about the consequences of hefty debt in an inevitable environment of rising rates.

It's actually a very delicate balance; discourage spending too much, and you choke off the recovery, but if you encourage it too much, all kinds of other problems start to present themselves. And either way, the government will likely have to assume a lot more debt to manage the immediate problem.

For what it's worth, I expect that Carney's prediction of rising interest rates in the near future will come to pass, and that in itself is reason for the average person to be cautious in this regard. I also expect that many governments will be forced to increase their indebtedness (which is already significant in some cases). Fortunately Manitoba has more wiggle room than most jurisdictions:

Premier Greg Selinger, delivering his first state of the province address on Thursday, exuded the steady-as-she-goes posture of the throne speech. Things are bad all over the world right now, Selinger said, but thankfully not quite as bad here in Manitoba.

He repeated the flat-is-the-new-up mantra he used on throne-speech day. He once again gave no indication that the worst consequences of a recession -- massive spending cuts, layoffs, tax increases -- will be seen here.

Critics may find this a massive rationalization. But to be honest, Manitoba's relatively stable, no-growth performance this year, and modest growth projected for next year, is looking better and better all the time.

So writes Dan Lett in the Winnipeg Free Press. Given that the other three western provinces are all running deficits, we're doing pretty well... so far. I expect we'll have to run one eventually, though.